What The Extinction Crisis Means To Businesses

Business people! Why are we still talking about anything else than the global extinction crisis? We are heading not for a disaster or catastrophe but to the very extinguishing of life. The last five years alone have all been the warmest on record. Species of all kinds die off at an ever-increasing rate. Insects are dying in droves, by 75% in the last 26 years in Germany. Global Forest health is at the lowest it has ever been. Global CO2 concentration has exceeded 400 parts per million. With 415 ppm, it is the highest it has been on earth in 14 million years – and it is still increasing exponentially. 

These Curves Mean Catastrophe

Even supposing there is no irreversible tipping point, such as the sudden release of methane from former permafrost regions, we are on track to destroy all life on earth. The catastrophe is here already; we are all living smack in the middle of it.

Some frame the extinction crisis as an investment crisis, an opportunity to re-allocate resources to different sectors, like renewable energies or sustainable companies. While I think this is useful, it is not enough. Given the sheer size of the challenge, we are likely to need more than simple re-allocation of resources within an updated system of governmental regulation that. Sticking to the same system of running companies is like re-arranging the deck chairs on the Titanic. Our ship has already hit the iceberg and water is flowing in. I think there are four levels to address the ecological armageddon as a business.

Ways to Respond to the Extinction Crisis

Level One: Acting in the market and legal framework 

For the most part, businesses are awaiting changes to (CO2-)prices, taxes, laws, and regulations pushed on them by the government sector. Business is groomed to work in the market framework supplied by the government, while big business is a detractor to those changes by lobbying for lighter, delayed, merely symbolic regulations.

Level Two: Minimize the impact on the environment

Business people often possess a “can do” attitude. Still, they take pretty timid steps towards a green renovation of companies. Much amounts to greenwashing, like reducing carbon footprints by this or that energy-efficient building design, small changes to vehicle fleets, or this or that petty change to a product. Some companies have promised to become climate neutral by some date, e.g., Siemens by 2030, Volkswagen by 2050. Microsoft even claims to have been carbon neutral ever since 2012. 

The underlying mindset here is to do less damage – in the awareness that upcoming government regulation and customer pressure will probably make curbing a companies worst environmental excesses inevitable. The problem with this approach is that it is unlikely to be enough. As economists have shown, we can’t grow out of this crisis by relying on technological advances alone. That might have been possible some decades ago. Still, now it appears too late, given the current and by some measures decreasing rate of technological progress and the much higher and exponentially increasing rates of environmental degradation.

In a quantitive study of the upcoming ecological challenges to the economic system, economist Tim Jackson (quote) concludes that besides technological progress, we will need de-growth, too, to save life on earth. If this is so, how can we de-grow? Well, first of all, we need to get rid of those things no one really needs.

Level Three: Changing products and services

Much more aspirational than to minimize ecological impact is to seek to improve the world with one’s products and services. A good start is to make products more durable, repairable, recyclable, sustainable. This will invariably mean to provide less physical products and focus more on virtual services. 

Still, wherever there is a buck to make, a company will race to meet demand. Tobacco companies, oil companies, suppliers of sugary drinks – if there is demand, companies will not only fill it, they will seek to increase it. After all, that is inherent in the dynamics of the capitalist system. Should the capitalist mode of production have a chance to survive, the free interplay of supply and demand needs to be harnessed in a way that avoids harmful economic activity. The result will probably be a more regulated, “socialist” economy.  

Companies can anticipate this trend by aiming higher than just minimizing their impact. They may give themselves a purpose that aims higher than just meeting customer demands. Companies may seek to play a positive role, not only by creating happy customers but by helping life itself to prosper on this planet while doing business.

Level Four: Seeking better internal guidance

Yet, schemes of voluntary restraint are hard to sustain for any company. The pressure to make money is just too big. In a clinch, will companies ever forfeit profits for ecological benefits? There is no way this will happen in a company using today’s model of corporate governance. For voluntary restraint to happen more often (not always), it requires a new model of corporate governance. A model that is tuned more towards

  • A holistic view of the world that encourages taking the high road more often.
  • A system that fosters evolutionary purpose in people and organizations.
  • More democratic, deliberate institutions that embed more checks and balances into decision processes.

Glimpses of such a futuristic, even seemingly esoteric model can be found today in companies like Buurtzorg, a 14.000 people health provider; Bridgewater, one of the largest and most successful Venture Capitalists; or Haier, a world-leading manufacturer of household appliances. Patagonia, an outdoor fashion company, is, for example, actively discouraging customers from buying being more of stuff.

All these companies and many more are have adopted governing models that encourage holism, evolutionary purpose, and deliberation. What’s more, they are even more successful with these governance structures than their more conventional competitors.

So let’s stop rearranging deck chairs

Yes, measures to increase profits and productivity are good and necessary things to discuss in companies. But let us not lose sight of the big picture, you people in the business. A comforting bank account won’t come with the assurance of a comfortable life for you or your children. In catastrophes, the rational thing is to be radical. Alternatively, you may continue to behave like an ostrich and do business as normal. It is your choice: Radical or Ostrich. There is no in-between and only one of those option will save humanity and all life on this planet.

I know this may sound way too dramatic for many people. That’s because it really is.

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Further Reading

  • More on technology and the environment: Read John Lovelocks 2019 book “Novacene.”
  • More on the dramatic impacts of the climate catastrophe read Wallace-Wells 2019 “The uninhabitable Planet.”
  • More on economics and the climate catastrophe: Read Tim Jacksons 2017 “Prosperity without Growth” or Kate Raworth 2018 “Doughnut Economics.”
  • More on progressive organizational systems can found in my 2020 book “Liberated Companies- how to create vibrant organizations in the digital age” and on the Liberated.Company site. The ebook is in-store now; paperback will be in store the next days; hardcover is already available (Germany only)
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